At its core, banking is the same across the world. What started as a gold custodian service evolved into what it is today. The core may be similar across the world but each country has to tweak the service to meet the specific needs of its people.
Looking at some of Zimbabwe’s peculiarities, you can clearly see how an outsider would be hard-pressed to come up with banking solutions that would properly serve Zimbabweans.
Here we have a population that; largely mistrusts banks, prefers using cash and will withdraw all their savings at the earliest convenience, never really adopted credit cards, does not have ready access to the internet etc.
Despite this, Zimbabwean banks have largely had to rely on core banking software developed by and for first-world country banks. As a result, they have had to work with bloated and expensive software packages like Temenos T24, Oracle FLEXCUBE and Finacle.
Our banks use only about 30% of the modules on these softwares according to estimates. So, essentially they are paying for what they don’t need.
It gets worse, trying to get these huge software companies to actually incorporate Zimbabwean needs is expensive. We’re too small a market for them to cater to our unique needs on their own.
It’s like trying to ask Microsoft to customise Windows for you, removing what you don’t need and adding some stuff that’s important to you. If that’s an option you will pay top dollar for it.
So Zimbabwean banks have had to try and create their own modules and integrate them with these bloated softwares. It’s not an easy task. It is both challenging and expensive. You may have noticed that local banks that have tried to innovate the most have struggled with stability issues. That’s how hard it’s been to integrate.
The problem in short – Zim banks are paying a lot, in precious forex no less, for bloated software which packs fancy but useless modules and lacks important Zim-specific ones. Developing their own modules is an option but integration is expensive, difficult and time-consuming. This is a major factor hindering innovation in the sector.
Cashlinq
This is where Mugonat Systems Incorporated and their Cashlinq software come in. Cashlinq is a banking platform software-as-a-service that seeks to solve the problems we outlined above and more. Flexibility and affordability are what Cashlinq is offering to banks.
Well-established financial institutions can use Cashlinq to complement their core banking software by hosting low-value accounts there for example.
See, the foreign software companies mostly charge by the account and so it is expensive for a bank to keep an account open that is used once a year to purchase $10 airtime. This is why banks close accounts that have not been used in a while.
Cashlinq has a number of pricing arrangements and does not charge per account per month like the Westerners. They have a more Zim-friendly ‘percentage of transaction fees’ option that would allow banks to open and maintain as many low-value accounts as they want.
Offloading low value onto Cashlinq would also have the advantage of lessening the load on core banking platforms. Leading to faster transaction processing.
Cashlinq does not insist on USD payments for all this. Something that banks would appreciate.
Cashlinq’s solutions go beyond just core banking though. In fact, Cashlinq targets all organisations that may want to offer banking services. Other Fintechs, digital-only banks and even mobile network operators can benefit. Here is how Cashlinq puts it.
- Well-established financial institutions – Best used to host mobile wallets and low-value accounts. Will reduce licencing costs and boost transaction processing performance. Because Cashlinq is a platform, financial institutions can use it to tap into the innovation of various Fintechs whose modules can easily be integrated.
- Mobile network operators – can run 2nd generation mobile wallets.
- Fintechs – an easier way to offer innovative solutions in lending, remittances, payments, savings and more to banks
- Non-financial companies – an easier way to launch products like loyalty cards or help customers manage finances
Cashlinq traction
This is not just an idea. Cashlinq is already on the ground and already has customers on its books. They are in Zambia, working with a digital-only bank. They have delivered some once-off solutions to some Zimbabwean banks and are currently working with some banks and microfinance institutions.
Oh, and they are working with one mobile network operator and we shall be seeing the benefits that 2nd-generation wallets bring. Cashlinq was not at liberty to say which mobile operator it is but it can’t be EcoCash which is tied to Mahindra and I doubt that it’s Telecash, so you do the math.
It is impressive that Cashlinq has achieved all this despite not being operational for a year. The finance sector is not easy to break into. Banks are heavily regulated and the nature of their work makes them unwilling to trust anyone who claims to revolutionise their industry.
It helps that the cofounders of Cashlinq had experience with the sector, one having worked as a management consultant and the other as a lead developer for years. This surely helped open some doors. We shall talk about the story of the founders separately as that is interesting on its own.